Whither is Wheat?

According to a report the government has finally decided to import one million tonnes of wheat. Flip-flop on the part of the government does not reflect well on the quality of decision-making. Each passing day reinforces an impression of a confused government completely confounded. It has been left to the Ministry of Food and Agriculture to choose between Trading Corporation of Pakistan (TCP) or Pakistan Agriculture and Seed supply Corporation (PASSCO) as one of the two agencies to organize the imports. The latter caused a near fiasco in its last aborted attempt involving imports of Australian wheat. The TCP should perhaps have been the natural choice for having had the necessary expertise.

This would perhaps be the first time that wheat is being imported in summer while the crop has just about been harvested. This is normally the time of plenty coinciding with falling prices. It is another matter that the government agencies involved with this vital item of daily use of every Pakistani bungled up the entire trading process by derailing normal private trading and thus raised the prices to phenomenal level.

The private sector will take years to recover from the harm. Had the government policy made any sense prices would be lower and wheat abundant. It is, therefore, proof enough if one is needed of a failed policy, which with persistence will not transform itself into a success story.

With each passing day the wheat situation gets murkier. The Government anticipated a less than optimum crop and decided to import wheat, arrival of which was to coincide with the wheat-harvesting season. Normally import months are November to January. It was in February that the ships from Australia arrived but the Government decided not to accept the goods for being less than of the specified quality.

There was a suspicion that the Government had by now revised its estimate of the expected crop upwards and therefore was looking for an excuse to abort the imports. The same shiploads, which were not according to our specifications, were accepted in UAE.

The entire period from March to May has seen a consuming crisis take a firm hold. It is an irony that at the harvesting time when the prices usually drop and the Government is only required to guard against an oversupply when every grower wishes to sell his produce in the market and stem a fall by rushing to provide safety net to the growers through support prices. Against a support price of Rs.350/40 kgs, wheat is available, if at all at Rs.400-450/40. K.gs.

The year 2000 saw a bumper crop of wheat and some well-heeled functionaries of the government gave themselves the credit for their enlightened approach for the outcome having increased the support price that year to Rs. 300. Why has the outcome been different this year in spite of a hefty increase this year?

The Government has “discovered” the cause of the crisis to be due to “hoarding”. And it has responded to the problem in the market by ordering administrative measures, like raids on wheat loaded vehicles, go downs and imposition of ban on movement of the commodity from district to district or from Punjab to other provinces.

But this has only compounded the crisis. The latest decision to import has had a healthy effect on prices, which are reported to have fallen by Re.1 per k.g.

What has actually happened no body knows. The estimates of wheat crop have varied between 19 and 21 million tonnes. With a carry over of two million tonnes even the lower end of the estimate should suffice for domestic consumption without need for imports, according to the consumption requirements of the populace. The crisis appears to be man made and has been caused mainly by the government.

Its misplaced policy of fixing a procurement target and adopting draconian measures in trying to achieve it, because growers did not want to sell at Rs.350/-, which is a base price, when higher prices prevail in the open market, misses the point. The Punjab, which is the largest surplus producer of wheat, is in the forefront for the blame. It has resorted to colonial methods of imposing restrictions on movement of wheat from one district to another and particularly from Punjab to other provinces, as if Punjab is a country within a country. The ban has thrown the wheat trade in a spin. Hence the crisis. Hoarding is the result of these abominable measures.

Had the prognosis been right, these methods would have yielded the desired results. Punjab is far from meeting its procurement target. It has only succeeded in pushing the wheat into the go downs of the hoarders and pushed the prices up – both eventualities it wanted to avert with its misguided and misconceived policies. It has robbed the grower of his due share of his reward the market price offers him, which would have ranged between Rs.350 to 400 had the ban on movement not been imposed. The consumer would have been better off at that affordable price.

The government of Punjab has hurt the consumer, the grower as well as the trader. The flourmills are constrained in their operation for want of supply of wheat from the go downs either of the government, which wont issue them the quota precisely when it is needed or of the private traders, who have reportedly hoarded it. The flourmills are in a state of panic and most of them are closed. Government stocks are intended to allow it to overcome shortages by being a swing player by releasing stocks when the private trader is trying to indulge in profiteering, and by withholding them when there is glut.

A recent report in a leading English paper ascribes the crisis to an exaggerated estimate of the wheat crop at 16 million tonnes in Punjab, which according to a former Federal Agriculture Secretary, Dr. Zafar Altaf is no more than 13 million tonnes. Where did he get these figures the report would not say? According to him hoarding is not the cause of the problem but it is the low output. Both causes appear to be a misreading of the situation.

The official estimates for the crop are of 20 million tonnes of which Punjab has produced 15.9 million tonnes. Pakistan is headed for serious wheat shortage in the coming months according to him. The scribe of that news goes on to say that unprecedented bumper crop of 21 million tonnes of wheat during the year 2000 was due to Mr. Altaf. His report ends with a gloomy forecast that the present wheat problem is on account of failure on the part of his successors to provide necessary interventions ‘in its different regimes including intercropping of wheat with rice and cotton’.

Whether the scribe got carried away with glib claims of the former Secretary or arrived at the results through an independent analysis is not known. But the facts must speak for themselves. The former Secretary has been dealing with agriculture right since 1985 when he was Provincial Secretary in Punjab. If he wishes to claim credit for the unprecedented wheat crop in 2000 he must share the blame for poor performance in the preceding years.

Even in the year 2000 the harvest of 21 million tonnes reflected an increase in production in Sindh and Punjab but a fall in the other two provinces. Does it mean that the formidable Secretary was incharge of only half the country? He was Federal Secretary for Agriculture thrice between 1993 to 1996 and 1998 to 2000 and Chairman Pakistan Agricultural and Research Council twice. The years 1998-99 saw a decline in the production of wheat and so did the year 1993-94.

That is not to say that he was not contributing his bit to the improvement in agriculture. But that is only to underline the arrogance and the hubris on the part of the former Secretary to claim complete credit for a good crop in 2000.

A mini survey by Agriculture Prices Commission had determined that the causes of wind fall were fortuitous event and owed mainly to weather conditions and to the exertions of the former Chief Minister, Punjab Mr. Shahbaz Sharif who had ensured good governance extending to the Agriculture Sector as well and involved timely availability of pesticides, seeds, etc..